When refinancing a traditional mortgage loan your lender will require verification of your income. Most lenders require complete documentation in the form of pay stubs, statements, or 1099s. For some people documenting income from self-employment or investments can be difficult if not impossible. If you are a homeowner with unpredictable income you may benefit from “no-doc” mortgage refinancing.
No doc mortgage loans are loans that you don’t have to prove your income. Homeowners can refinance their mortgages without documenting where and how much their income is. The catch is you will pay a higher interest rate and may have to accept less favorable terms for securing this type of mortgage loan. No doc loans represent a higher risk for mortgage lenders; this risk is passed on to you in the form of higher payments and strict terms. These terms can include higher penalties for late or missed payments.
To learn more about refinancing your mortgage sign up for our free guide: “Five Things You Need to Know Before Refinancing a Mortgage.”
My name is Robert Regehr and I’m a personal finance blogger with a chip on my shoulder for banks and mortgage brokers that take advantage of my friends and neighbors.
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